The Wednesday Market Movers

Symrise (AG) led the way, rallying 6.22% on upbeat forecasts for 2024.

Bayer partially recovered losses from Tuesday, gaining 2.66%. Rising bets on an H1 2024 Fed rate cut supported tech stocks. Infineon Technologies and SAP rose by 2.02% and 1.04%, respectively.

Retail-linked stocks also made gains, with Zalando SE and Adidas rising by 3.20% and 0.46%, respectively.

However, auto stocks were among the worst performers. Volkswagen slid by 2.00%, with BMW falling by 1.52%. Mercedes-Benz Group and Porsche saw losses of 1.23% and 1.24%, respectively.

German Factory Orders and the ECB Press Conference in Focus

On Thursday, German factory orders for January will warrant investor attention. After better-than-expected German trade figures, an unexpected pickup in factory orders could ease fears of a prolonged recession. Economists forecast factory orders to slide by 6.0% in January after surging 8.9% in December.

While factory orders will draw interest, the ECB monetary policy decision and press conference will be the main event.

Economists expect the ECB to hold interest rates at 5.50%. However, uncertainty about the timeline for an ECB rate cut lingers. ECB staff economic and inflation forecasts and views on the timeline for interest rate cuts will put the ECB press conference under the spotlight.

The markets expect an H1 2024 ECB rate cut. A more hawkish ECB rate path could impact the buyer demand for DAX-listed stocks.

US Economic Calendar: Initial Jobless Claims and the Fed

On Thursday, the US labor market will be in focus. After the ADP and JOLTs Job openings, an increase in jobless claims would raise bets on an H1 Fed rate cut.

However, the Fed will also need consideration. Fed Chair Powell will deliver the second day of Testimony on Capitol Hill. The second day of testimony tends to throw up very few surprises. Nonetheless, investors should monitor for deviation from the Wednesday script.

On Thursday, FOMC member Loretta Mester will also deliver a speech. Views on the timeline for Fed rate cuts need consideration.

Short-term Forecast

Near-term trends for the DAX will likely hinge on the ECB monetary policy decision and the US Jobs Report. More hawkish-than-expected ECB and hotter-than-expected Jobs Report could pressure the demand for DAX-listed stocks.

On Thursday, the DAX futures and the Nasdaq mini were down 8 and 31 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX sat well above the 50-day and 200-day EMAs, sending bullish price signals.

A DAX break above the Friday all-time high of 17,817 would support a move to the 18,000 handle.

The ECB, US economic data, and Fed Chair Powell need consideration.

A drop below the 17,650 handle would bring the 17,500 handle into play.

The 14-day RSI at 76.34 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,817.

As a result, the US dollar trade surplus widened from $75.34 billion to $125.16 billion.

The better-than-expected trade figures drove buyer demand for the Aussie dollar. China accounts for one-third of Australian trade. Australia has a trade-to-GDP ratio of over 50%, with 20% of the Australian workforce in trade-related jobs. A pickup in demand would be a boon for the Australian economy and the Aussie dollar.

China, Trade, and the RBA Rate Path

Significantly, an improving Chinese economy could influence the RBA interest rate trajectory. In February, RBA Governor Michele Bullock affirmed that RBA staff included China’s economic woes in the RBA growth forecasts. A more robust economic outlook could raise growth forecasts and impact bets on an RBA rate cut.

AUD/USD Reacts to Trade Data from China

Before the trade data from China, the AUD/USD fell to a low of $0.65601 before rising to a high of $0.65780.

In response to the trade data, the Aussie dollar dipped to a low of $0.65735 before reaching a high of $0.65780.

On Thursday morning, the Aussie dollar was up 0.19% to $0.65763.

RBNZ Governor Adrian Orr and Chief Economist Paul Conway will continue their speaking engagements next week.

The RBNZ advise:

While Governor Adrian Orr is in Europe attending meetings, he will also speak about the February Monetary Policy Statement (MPS) to clients of JB Drax on 12 March and clients of Barclays Capital on 13 March, both in London.

• For both events the Governor will speak to the February MPS presentation slides (PDF, 2.7 MB) which are published on our website.

• There are no published speaking notes.

• There will be no new information provided.

Chief Economist Paul Conway will speak about the February Monetary Policy Statement (MPS) to a Kiwibank breakfast event between 7am to 9am, 14 March at Royal Akarana Yacht Club, Tamaki Drive, Auckland.

• Mr Conway will speak to MPS presentation slides (PDF, 2.7 MB) published on 28 February.
• There are no published speaking notes.
• There will be no new information provided.

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While the RBNZ says “There will be no new information provided” there is always the prospect of something slipping out unexpected in any Q&A following the prepared speeches.